The president welcomes debt reduction
A NUMBER of writers on the left have been frustrated with what looks like terrible White House bargaining over the issue of an increase in the debt ceiling. Virtually everyone who matters in Washington, including the Repubilcan leadership, agrees that the debt ceiling must be raised and will ultimately support an increase in the debt limit. It is therefore difficult to see how the Republican leadership can credibly argue that it won't support an increase in the debt limit unless it gets what it wants. And it's therefore very hard to understand why Barack Obama would accept that he must negotiate with the Republicans. Kevin Drum writes:I think we should at least admit the possibility that Obama is neither stupid nor insane. Sticking firmly to a negotiating position is hardly rocket science, after all, and all analogies to poker playing aside, it's hardly plausible that Obama doesn't get this. So surely the most likely explanation for his position is that he wants Republicans to make demands on him.I don't know exactly why he wants this. Maybe he's itching for a fight. Maybe he thinks it will make Republicans look bad. Maybe he wants to cut spending but would rather give the appearance of having been forced into it. I don't know. But he's pretty obviously inviting Republicans to do this, not just stumbling into it accidentally. The only question is why.Yesterday, I attended a conference on the state of the economy hosted by the Financial Times and Bertelsmann. One of the first speakers was Treasury Secretary Tim Geithner, and he said something I found very interesting. Asked about the seriousness of the debt-ceiling fight, he immediately went into soothing mode, explaining that both parties recognise the need to raise the limit and are prepared to do so. But then he said something very interesting (and this is a rough quote): that while everyone understands the need to increase the ceiling, "we want to take advantage of this moment".I wrote yesterday that trying Congress trying to force itself to do something is like attempting to not eat a bag of cookies by hiding the cookies. If you're motivated to eat them, you know where they are, and you can just go get them and eat them. But if you hide the cookies somewhere that's hard to get to, then you make retrieving them an annoyance and maybe, just maybe, your plan will work. Maybe you can trick yourself into taking an unpleasant action—not eating those delicious cookies.I suppose it's worth considering the possibility that 1) the White House is sincerely concerned about the country's debt problem, and 2) while the president recognises that in an ideal world policy would follow the macroeconomically reasonable path of more borrowing now, and a sensible medium-term plan for cuts later, he 3) understands that the policy world is not ideal, and that Congress only makes real strides on the deficit when it is forced to, usually by bond markets. And perhaps 4) he thinks that it would be unwise to let the country get to a place where it is forced by bond markets to cut, and so he's 5) willing to use the inconvenient cookie strategy to allow the GOP to manipulate him into cuts while the bond vigilantes are still far, far away.I don't know if that's what he's thinking, and I don't know if that's a particularly good strategy. But it is a possibility worth considering.